Phil Querin Article: Portland City Code: Portland Renter Protections - Will It Apply to Manufactured Housing Communities and Moorages?

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Update:  Last week the MHCO Board decided unanimously to make a major contribution to  "Say No To Rent Control".  This coalition will be working to overturn the new Portland City Code.  The MHCO Board believes that any trespassing on landlord's ability to raise raent needs to be strongly rebuked.  MHCO will be working with attorney John DiLorenzo at Davis, Wright, Tremaine LLP.  MHCO will keep you up to date as we move forward with this litigation.

In the meantime, MHCO Attorney Phil Querin has thoroughly analyzed the new code and provided a complete analysis of the new law.

By Phil Querin

BackgroundOn October 7, 2015, the City of Portland amended its Code to address what it believes is a shortage of available housing units for rent.  What is unique about this move is that it is directed not only at Federal or State subsidized rentals, but all rentals, whether they fall into the category of “affordable housing” or not.  In order to accomplish this, the City used a pre-existing section of its Code titled “Section 30.01 Affordable Housing Preservation” and added the following text: “and Portland Renter Protections” to its caption. It then went on to amend certain sections to make it clear the new rules applied to both regulated housing (i.e. publicly assisted affordable rental housing to low and moderate income persons and households), but all rental housing in the city.[1]

 

Portland City Council FindingsSet out below are the findings used as the basis for the amendment:

 

  1. The City of Portland has been experiencing record low vacancy rates, which as of the third quarter of 2015 is estimated at 3.2%.

 

2. The City of Portland, as of August 2015, had the highest rental growth in the nation at 15.4% in a one-year period.

 

3. Record high rents coupled with high vacancy rates[2] are creating unprecedented housing uncertainty for many Portland families.

 

4. Portland is experiencing high rates of gentrification and displacement; renters are being priced out or otherwise displaced from their neighborhood.

 

5. Portland renters need more advance notice of a no cause termination of tenancy than the state law minimum notice of 30 days; 30 days is not adequate time for renters find and secure a new rental unit.

 

6. Portland renters need more advance notice of rental increases than the state law minimum notice of 30 days; 30 days is not enough time for renters to budget for the extreme rental increases many families are facing.

 

7. In order to provide tenants enough time to find and secure a new rental unit the minimum written notice of a no cause termination of tenancy should be 90 days.

 

8. In order for tenants to be able to budget for a rent increase a tenant should be given a minimum of 90 days written notice of a rent increase that is more than 5 percent in a 12-month period.

 

Chapter 30.01 Affordable Housing Preservation and Portland Renter Protections. Set out verbatim below, is the new ordinance found at Section 30.01.085 (Portland Renter Additional Protections). It appears from elsewhere in the pre-existing text of Chapter 30.01, that it will be enforced by the Portland Housing Bureau and/or the City Attorney’s office.[3] 

 

A. In addition to the protections set forth in the Residential Landlord and Tenant Act, the following additional protections apply to Tenants that have a Rental Agreement for Premises covered by the Act. For purposes of this chapter, capitalized terms have the meaning set forth in the Residential Landlord and Tenant Act.

 

B. A Landlord may terminate a Rental Agreement without a cause specified in the Act only by delivering a written notice of termination to the Tenant of (a) not less than 90 days before the termination date designated in that notice as calculated under the Act; or (b) the time period designated in the Rental Agreement, whichever is longer. This requirement does not apply to Rental Agreements for week-to-week tenancies or to Tenants that occupy the same Dwelling Unit as the Landlord.

 

C. A Landlord may not increase a Tenant's Rent or Associated Housing Costs[4] by 5 percent or more over a 12 month period unless the Landlord gives notice in writing to each affected Tenant: (a) at least 90 days prior to the effective date of the rent increase; or (b) the time period designated in the Rental Agreement, whichever is longer. Such notice must specify the amount of the increase, the amount of the new Rent or Associated Housing Costs and the date, as calculated under the Act, when the increase becomes effective.

 

D. A Landlord that fails to comply with any of the requirements set forth in this section 30.01.085 shall be liable to the Tenant for an amount up to three months (sic) Rent as well as actual damages, reasonable attorney fees and costs (collectively, "Damages"). Any Tenant claiming to be aggrieved by a Landlord's noncompliance with the foregoing has a cause of action in any court of competent jurisdiction for Damages and such other remedies as may be appropriate.

 

Will Portland’s New Code Amendment Apply to Manufactured Housing Communities & Moorages in the City? It would have been helpful had the drafters of this amendment remembered that ORS Chapter 90 applies to both “stick-built” homes (i.e. single family rentals, plexes, and apartments) and manufactured homes located in manufactured housing communities (as well as floating homes in moorages), pursuant to ORS 90.505 et seq.  Instead, Paragraph A of Section 30.01.085 states:

 

“In addition to the protections set forth in the Residential Landlord and Tenant Act, the following additional protections apply to Tenants that have a Rental Agreement for Premises covered by the Act. For purposes of this chapter, capitalized terms have the meaning set forth in the Residential Landlord and Tenant Act.” (Italics mine.)

 

So, here are some unavoidable conclusions – and perhaps unintended consequences – regarding the breadth of the new ordinance:

 

 

“… all agreements, written or oral, and valid rules and regulations adopted under ORS 90.262 (Use and occupancy rules and regulations) or 90.510 (Statement of policy) embodying the terms and conditions concerning the use and occupancy of a dwelling unit and premises. Rental agreement includes a lease. A rental agreement shall be either a week-to-week tenancy, month-to-month tenancy or fixed term tenancy.”

 

 

“… (a) A dwelling unit and the structure of which it is a part and facilities and appurtenances therein; (b) Grounds, areas and facilities held out for the use of tenants generally or the use of which is promised to the tenant; and (c) A facility for manufactured dwellings or floating homes.”

 

 

“Dwelling unit means a structure or the part of a structure that is used as a home, residence or sleeping place by one person who maintains a household or by two or more persons who maintain a common household. Dwelling unit regarding a person who rents a space for a manufactured dwelling or recreational vehicle or regarding a person who rents moorage space for a floating home as defined in ORS 830.700 (Definitions for ORS 830.060 to 830.140 and 830.700 to 830.870), but does not rent the home, means the space rented and not the manufactured dwelling, recreational vehicle or floating home itself.” (Italics mine.)

 

  • And if there was any question about the intent of ORS 90.100(12) and (34)(c), ORS 90.505(1) puts a space rental agreement in a manufactured housing community on equal footing with any other residential rental agreement where the “premises” (e.g. the rental home, the plex, the apartment, the space, or the slip) is owned by someone other than the renter:

 

“As used in ORS 90.505, rent a space for a manufactured dwelling or floating home, or similar wording, means a transaction creating a rental agreement in which the owner of a manufactured dwelling or floating home secures the right to locate the dwelling or home on the real property of another in a facility for use as a residence in return for value, and in which the owner of the manufactured dwelling or floating home retains no interest in the real property at the end of the transaction.”

 

Clearly, the new ordinance does not expressly exempt rent increases in manufactured housing or floating home communities.

 

DiscussionWhether or not the drafters of Portland City Code Chapter 30.01 intended to apply these new restrictions to moorages and manufactured housing, the plain text of the ordinance, coupled with its reliance upon the entirety of ORS Chapter 90, makes no exception for them. Ergo, they are included – to the extent they apply.

 

Let’s look at each of the proscriptions:

 

  1. Under Paragraph B of Section 30.01.085, landlords and managers are prohibited from issuing a not-for-cause (or “no cause”) termination of less than 90 days. It appears that since Portland landlords heretofore had the right to terminate a tenancy without cause upon the issuance of a 30-day or 60-day written notice[5], the extra time under the new ordinance is intended to give the tenant more time to look around for suitable substitute housing.

 

This, on its face, would not apply to manufactured housing and moorage tenants owning their own homes, since there is no such thing as a not-for-cause termination.  However, the Portland ordinance would appear to apply in the following instances:

  1. Where the resident owns a recreational vehicle in a manufactured housing community, since RVs are exempted from the manufactured housing section of the Oregon landlord-tenant law. See, ORS 90.100(27) and (28).
  2. Where the resident is not the owner of the home, e.g., they are leasing a park-owned home or subleasing a home from another homeowner.[6]

 

  1. Under Paragraph C of Section 30.01.085, landlords and managers are prohibited from increasing a resident’s rent or “Associated Housing Costs”[7] by 5 percent or more over a 12-month period, unless they first give written notice at least 90 days’ prior to the effective date of the rent increase.

 

This provision would not appear apply to tenants owning their own homes, since ORS 90.600(1) already requires written 90-day notices of rent increases – at least on periodic tenancies, e.g. month-to-month

 

But what about fixed-term tenancies, i.e. leases? There are no express rental increase restrictions (in amount or timing) for space leases under Oregon manufactured housing law. This is because it is presumed to be set forth in the body of the lease itself, since the 90-day notice protocol only applies to periodic tenancies.

 

The premise is that under ORS 90.545(2), the landlord is required to give not less than 60 days’ written notice of the terms of its new lease, together with any other new park documents (e.g. rules and statement of policy) that differ from the prior lease period.[8]

So under Portland’s new ordinance, if the rent and associated housing costs upon the commencement of the new lease term were over 5% of the prior term, the landlord would have to give 90 days’ advance written notice, not 60.

 

Moreover, even before the end of the lease term, the Portland ordinance can affect landlords. Since the rent increase statute, ORS 90.600(1), only applies to month-to-month tenancies, this means that for community owners with leases containing rental increase formulas, under the ordinance, they now must be preceded by at least 90-days’ written notice if the increase is over 5%. If the lease already provides for at least 90-days’ notice, then all is fine. But if the rental increase protocol in the lease is less than 90 days, the Portland ordinance mandates at least 90-days’ advance written notice, if the increase is 5% or more. 

 

Note also, the 5% cap includes not only base rent, but “associated housing costs”, which are defined as including:

 

“…compensation or fees paid or charged, usually periodically, for the use of any property, land, buildings, or equipment. For purposes of this Chapter, housing costs include the basic rent charge and any periodic or monthly fees for other services paid to the Landlord by the Tenant, but do not include utility charges that are based on usage and that the Tenant has agreed in the Rental Agreement to pay….” (Italics mine.)

 

This means that in the context of leases in manufactured housing communities and moorages: (a) The 5% cap includes not only the base rent, but most, if not all, of the other factors used in most rent increase formulas to arrive at the new rent, and (b) If utilities are paid via a pass-through regime (e.g. submetering), they will not be calculated toward the 5% cap. (If the utilities are not passed through and not included in the base rent, but contractually payable by the resident under the lease, e.g. cable TV, they would not be treated as an “associated housing expense”, or applied to the 5% cap.)

 

Is the Portland Ordinance “Rent Control” in Violation of ORS 91.225?  In relevant part, this statute provides as follows:

 

“(1) The Legislative Assembly finds that there is a social and economic need to insure an adequate supply of affordable housing for Oregonians. The Legislative Assembly also finds that the imposition of general restrictions on housing rents will disrupt an orderly housing market, increase deferred maintenance of existing housing stock, lead to abandonment of existing rental units and create a property tax shift from rental-owned to owner-occupied housing. Therefore, the Legislative Assembly declares that the imposition of rent control on housing in the State of Oregon is a matter of statewide concern.

 

(2) Except as provided in subsections (3) to (5)[9] of this section, a city or county shall not enact any ordinance or resolution which controls the rent that may be charged for the rental of any dwelling unit.”  (Italics mine.)

 

Does the new ordinance “control the rent that may be charged….”?  It clearly does not place any direct limitation on the amount of rent that landlords may charge in the city, and I suppose that will be the stock response from the Portland City Attorney’s office. Case closed.

 

But it does appear to indirectly impose certain limitations.

 

Example. Before the Portland ordinance, landlords could impose a rent increase with 30 days’ notice. On a month-to-month tenancy, this meant, for better or worse, that the tenant would have to choose between paying, or vacating. Since rents are payable in advance, upon receiving the 30-day notice of increase, the tenant could immediately begin looking for a substitute rental and give a 30-day notice of intent to vacate. 

 

Under the new ordinance, if the increase of base rent and associated housing costs exceeded 5%, the landlord would have to give at least 90-days’ written notice. Ignoring the time it takes to prepare the unit for a new renter, this means that the landlord’s rental income for two months is capped, or frozen, at the lower, pre-increase level.

 

Assuming that a landlord intended to issue a no-cause termination and subsequently institute a higher rent for the new tenant, before the Portland ordinance requiring 90 days, this could be completed in 30 days, or 60 days if the tenant’s occupancy was a year or more. In either instance, under the new ordinance, the landlord’s rent is frozen at pre-increase levels for either 30 or 60 days – assuming a 5% increase or more in base rent and associated housing costs. 

 

Rent JustificationLastly, one of the more sinister aspects of this ordinance is the following text in Paragraph C regarding the issuance of the 90-day notice of rent increase:

 

   “Such notice must specify the amount of the increase, the amount of the new Rent or Associated Housing Costs and the date, as calculated under the Act, when the increase becomes effective.”

 

Years ago, the rent increase statute that preceded ORS 90.600, required landlords or managers attend rent increase meetings with community tenants to answer questions regarding the increase. While the law did not mandate that landlords were required to reduce the scheduled rent increase, the process did force them to present some basic explanation “justifying” the increase, e.g. higher taxes, water, etc. Invariably, some of these meetings were attended by one or more residents who used the opportunity to blast management, demanding facts and figures supporting the increase. My advice to owners and managers at the time was speak only generally and not to “open the books” or quote figures; the moment that occurred, some form of accounting would be demanded.

 

Conceivably, under the new ordinance, landlords could be required to “justify” their 5.00%+ increase by showing how it was “calculated.”  This may be a stretch, and hopefully it will not be so construed.  Remember, this ordinance does not just apply to base rent, but to the associated housing costs that went into it.  And one look at the definition of associated housing costs, suggests such calculations could be daunting, and invite disputes over accounting protocols.

 

And just to make sure the ordinance carries its proper in terrorem effect, Paragraph D provides that a tenant “aggrieved” by a landlord’s noncompliance, may bring a cause of action in any court of competent jurisdiction for damages “…and such other remedies as may be appropriate.”:

 

“Landlord that fails to comply with any of the requirements set forth in this section 30.01.085 shall be liable to the Tenant for an amount up to three months (sic) Rent as well as actual damages, reasonable attorney fees and costs (collectively, "Damages").

 

Thus, even though the Portland ordinance does not “limit” rent increase to less than 5%, it creates a significant disincentive to give increases of 5% or more, by potentially imposing a duty to provide a written calculation which could open landlords up to tenant lawsuits. Rent increases with the proper 90-day notice that are under 5% get a pass. 

 

Conclusion – Is the Camel’s Nose Under the TentThis expression - which alludes to one who permits a camel to put its nose under the flap of his tent to stay warm at night, will find the entire beast inside the tent by morning – is what landlord’s, both inside and outside Portland, fear most about the new Portland ordinance.

 

If it remains unopposed, based upon feelings of charity and concern for affordable and available housing to all, it could soon morph into more direct controls that would be impossible to stop.  And there should be no mistake; other municipalities, e.g. Bend and other communities with rental housing shortages, must be watching with interest. 

 

To put a finer point on the issue, what landlords fear is governmental “mission creep”, where the task starts out innocuous, small, and well-intentioned, but ends up becoming an entrenched and unstoppable program, impossible to roll back, even when affordable rental housing becomes available.

 

 


[1] 30.01.010 Policy. It is the policy of the City of Portland that all Portlanders, regardless of income level, family composition, race, ethnicity or physical ability, have reasonable certainty in their housing, whether publicly assisted or on the private market. Consequently, publicly assisted rental housing affordable to low and moderate income persons and households should be preserved as a long-term resource to the maximum extent practicable, and the that-tenants of such properties should receive protections to facilitate securing new housing should the affordable units be converted to market rate units or otherwise be lost as a resource for low and moderate income housing. Likewise, Portland renters in unregulated housing on the private market, need additional protections to ensure that there is adequate time to find alternative housing in the case of a no cause eviction and adequate time to budget for an increase in rent. (Bold Italics new text.)

See also, 30.01.020 Intent. The intent of this Title is to protect the availability of publicly assisted affordable housing for low and moderate income households by: providing for notice to the City and tenants when transitions from current assistance programs and/or affordable housing uses are planned; providing purchase opportunities for the City to attempt to preserve the affordable housing while respecting ownership interests of building owners; providing tenant relocation assistance when the affordable housing is converted; and, ensuring long term affordability in future projects that the City assists with public financing designed to create or preserve affordable housing; and ensuring that all Portland renters, have additional protections to ensure more certainty in their housing security. (Bold Italics new text.)

[2] It is unclear whether this (“high vacancy rates”) is a typo or not. Finding No. 1. says “…Portland has been experiencing record low vacancy rates, which as of the third quarter of 2015 is estimated at 3.2%.” (Emphasis added.)

[3] 30.1.100 Compliance and Enforcement. *** (Amended by Ordinance No. 186028, effective May 15, 2013.) A. PHB (Portland Housing Bureau) shall develop and implement procedures to enforce the provisions of this code. Such procedures should include, where feasible, record notice of the applicability of this code to affected properties, filing a lien to enforce the provisions of this code, and developing civil penalties or other enforcement provisions necessary or appropriate to enforce this code. B. The City Attorney's Office may enforce the provisions of this code on behalf of the City in any court of competent jurisdiction or City administrative body.

[4] "Associated Housing Costs" include, but are not limited to, fees or utility or service charges, means the compensation or fees paid or charged, usually periodically, for the use of any property, land, buildings, or equipment. For purposes of this Chapter, housing costs include the basic rent charge and any periodic or monthly fees for other services paid to the Landlord by the Tenant, but do not include utility charges that are based on usage and that the Tenant has agreed in the Rental Agreement to pay, unless the obligation to pay those charges is itself a change in the terms of the Rental Agreement.

 

[5] 30 days if the resident’s occupancy is less than one year, and 60 days if it is a year or more.  See, ORS 90.427.

[6] The new ordinance does not apply to situations in which the tenant is sharing the dwelling with the landlord.

[7] "Associated Housing Costs" include, but are not limited to, fees or utility or service charges, means the compensation or fees paid or charged, usually periodically, for the use of any property, land, buildings, or equipment. For purposes of this Chapter, housing costs include the basic rent charge and any periodic or monthly fees for other services paid to the Landlord by the Tenant, but do not include utility charges that are based on usage and that the Tenant has agreed in the Rental Agreement to pay, unless the obligation to pay those charges is itself a change in the terms of the Rental Agreement.

[8] Under ORS 90.545(4) the tenant is to give the landlord not less than 30 days’ notice prior to the end of the lease term whether he/she accepts or rejects the new park documents.

[9] These exceptions permit controls on rents for properties serving low income residents under certain government programs; limiting rental increases for residents in apartment that have been converted to condominiums; and, rent controls during natural disasters.

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